Key Findings

Wage growth and low pay

Only 12 pence of every pound of UK GDP now trickles down to wages in the bottom half of the workforce. Meanwhile, low pay is pervasive with one in five UK workers paid below £7.50 an hour (£13,600 a year full-time), compared to fewer than one in 10 in some other countries. The scale of low pay in the UK jobs market is a fiscal crisis as much as a personal one, with the government now spending as much as £4 billion a year supporting low paid people through in-work benefits.

Although the bottom half of the workforce has fared poorly in a number of countries, the UK stands out. Three factors have combined to encourage the rise of low paid work in the UK: a chronic lack of skills in the bottom half of the workforce; a lack of structure in the jobs market that inhibits employer-investment in skills; and a lack of pressure on employers to pay more, even when they can afford to.